tonight on "nightline," inside america's biggest scam. as a historic health care vote finally draws near, see how medicare fraud sters are already stealing tens of billions of dollars from taxpayers. it's a "nightline" investigation. plus, the game of death. contestants are told to inflict pain on a total stranger, with what they believe is a massive dose of electricity. you'll be shocked at how many flip the switch. and, cake matters. the frosting, the layers, the filling. to bake a cake has become big
business, and the more elaborate, the better. let them eat cake, in tonight's "sign of the times." >> announcer: from the global resources of abc news, with terry moran, martin bashir and cynthia mcfadden in new york city, this is "nightline," march 17th, 2010. >> good evening, i'm cynthia mcfadden. we begin tonight with an investigation that is sure to make you angry. at a time when most americans are watching every penny, we're going to show you how criminals bilk taxpayers for billions. the government even admits that a staggering $60 billion is stolen annually from medicare. but the haul is probably much larger than that, in the hund d hundreds of billions what was clear to us after our investigation is that medicare fraud is one crime that does pay, and pay, and pay. tonight, "nightline" instigates medicare fraud.
>> let's go. >> reporter: federal agents piper and perez is on the trail of some of the most illusive and richest criminals in the u.s. part of a special strike force in south florida. what can you see? >> well, it's closed. >> reporter: this is supposed to be a working pharmacy. >> reporter: i have more than this in my medicine cabinet at home. i'm not kidding. >> this is just maintain the illusion this is a legitimate company. >> hello? >> reporter: though chances are it never sold so much as an aspirin. like so many other fraudulent companies, they allegedly billed medicare $1 million in two months, pocketed money and ran. >> okay, we found some stuff. this is cash. right here. >> this is actually somebody's name, their medicare number, their address, their phone number.
and this person may not even know that they were being billed. >> reporter: here's what law enforcement says happened. a fraudster bought the pharmacy for just $45,000, along with its medicare license and entire patient data base. so, with relatively low risk and little investment -- one person, sitting at this terminal for two months can submit $1 million worth of claims? >> you don't have to hire anyone. if you buy an existing company like happened here, you just come in, one person can come in at night, midnight, submit all the claims, and you never even have to open the business. >> reporter: so in two months time, for investment of a few hours, 1 million bucks? >> it's that easy. >> reporter: it's that easy, because in 99.9% of the cases, medicare auto ajudge kates claims in 30 days. >> that means, if you check the right boxes and fill out the right forges, you are going to get paid. >> reporter: until recently,
this was a federal prosecutor at the department of justice. in charge of prosecuting all criminal medicare fraud. >> criminals can take these forms and fill them out better and more complete than actual health care providers, so, real hospitals and doctors who are struggling every day to keep up with the paperwork, eir forms sometimes miss things. >> reporter: medicare makes life very easy for criminals. unlike credit card companies that stop payment the second a suspicious charge is made, we learned medicare is slow to respond, even wh people call to tell them about fraud what did you notice on your bill? >> thousands of dollars for treatments, i didn't know what they were. i think it turned out, it was for diabetes, but i don't know. all kinds of medications. >> reporter: but you don't have diabetes? >> nothing like that, no. and i called medicare and -- >> kind of questioned them.say? am i sure about this? >> reporter: pauler spent three years trying to convince
medicare that fraudulent charges were being made using her medicare number. when you total up the phony claims made under your medicare, how much? >> i would say close to $50,000. >> reporter: judge adder sat on the florida strait bench for decades. even he had trouble getting medicare to pay attention. >> i saw there was a report for a prosthesis that i of course never used. >> reporter: you mean -- >> legs. >> reporter: two fake legs? you have both of your legs? >> i do have both my legs. the bill was something like $30,000. i called medicare, the investigative university. >> reporter: what happened? >> nobody seems to care. >> reporter: so, why did you come today, the two of you? why did you come? >> because i'm tired of this going on. i want it stopped. i want to sock it to them. >> reporter: sock it to all those criminals, often former
drug dealers who get rich, very rich, buying expensive toys, from helicopters to sports cars and racehorses. all funded by easy to execute scams. this is another type. this time at a phony aids clinic. this video is being shot by an fbi informant. this is dangerous. they play for keeps. >> i know. i could get killed. >> reporter: here's the scam. he goes in, signs in and is paid off by the fraudsters so they can make a fake medicare claim. >> reporter: so you're going in the back room now? >> yeah, this is where the back room is. this guy is handing me money. >> reporter: 250 bucks? >> see the $100 bills? >> reporter: so, essentially, what we've just seen is him paying you off. >> paying me. >> reporter: so he can use your medicare number. >> yes. >> reporter: to make fraudulent claims? >> yeah. >> reporter: and you could do this all day long, if you wanted
to? >> uh-huh. >> reporter: agent piper says, for what you just saw, medicare paid the criminals $10,000 three times a week. so, $30,000 a week? >> yeah, per patient, one patient. so, when you get a group of 10, 20, 30 patients, you can see what a lucrative crime this was. >> reporter: the clinic was closed. but not before medicare paid the fraudsters $2 million. >> i've been over here in this strip mall. >> reporter: but there's no time to rest. agents piper and perez is on the move again, following up a new tip. they pop up like mushrooms. >> yeah, they pop up faster than mushro mushrooms. our subject is over there, and that's where we're going to go to next. >> reporter: this time, the pharmacy is open. >> this company is currently billing medicare. this month, as of the middle of the month, we have about a quarter million dollars in submissions to medicare. >> reporter: in order not to
jeopardize the investigation, we're not purr mitted to go in with the agents. but once they're out, we enter. hi, i'm cynthia mcfadden from abc news. we wondered if we could ask you a few questions. we know the fbi was just here. >> okay. >> reporter: have you made any sales today? >> today, no. >> reporter: and neither had the pharmacist have you had a prescription in today? >> today, no. no. >> reporter: so sure doesn't look like a place that would be legitimately billing medicare for $1 million. agent perez and piper don't think so, either. one more case is open, one more owner has disappeared. part of the reason is how easily a criminal can buy a company with an existing medicare license. >> it's very sime. what we do is, we go out and find the name of a corporation that we want tbuy. let's say abc. that's a good name for a company. >> reporter: so i can access this. i don't need a special fbi code to get this far. >> no, this is public information.
we buy a company that has a medicare provider number. once we do that, we have a license to steal. now, we go to another site. this is where every doctor's number, npi number, is located. you need the doctor's name and the doctor's number. >> reporter: i'm flabbergasted. just flabbergasted. we're halfway throh committing a crime, right here. >> yes. >> reporter: and plenty of those who do commit crimes are arrested by the fbi and the office of inspector general. just recently in detroit, where another strike team is located, agents conducted this early morning raid on a clinic that had collected $15 million in an alleged medicare scam. but that's just a drop in the bucket. so, this is a secret facility that we're in right now. >> it is. >> reporter: and what we see here are file after file after file. what are all these? >> these are cases that we have ongoing. >> reporter: south florida is ground zero for medicare fraud. jeffrey slowman is the u.s. attorney here.
how much fraudulent money do you expect is represented in these boxes? >> i think conservatively we're talking about way over $1 billion. probably in the neighborhood of $2 billion. we could probably employ every single lawyer in my office, 270 lawyers, 24 hours a day, 7 days a week, and still not solve the health care fraud problem in south florida. >> reporter: so, what's the problem? >> the problem is that medicare was designed to reimburse providers quickly, with no questions asked. >> reporter: despite the fact that the south florida strike force brought 170 cases last year, all their hard work hardly makes a dent. i'm just amazed from a tax boyer poinof view. they go crazy if they're going to have a 1% increase in our taxes. everyone goes nuts. and yet hundreds of billions of dollars are going out the door to criminals and everyone seems to not notice? >> that's the stunning part
about it. from my standpoint, relatively simple fixes can be instituted, and aren't. something's terribly wrong. >> reporter: there is a lot of agreement about that. earlier this week, president obama said stopping such fraud would help fund his ambitious health care plan. >> yes, we're going after the waste, the fraud, the abuse in medica medicare. >> reporter: the administration says they'll say $25 billion over the next ten years. sounds like a lot, until you reali izize at the rate things going, in the same ten years, $1 trillion could easily be stolen. outrageous. a broken system examined, as we draw closer to a vote on a health care bill. when we come back, from shocking government waste to a shocking social experiment. see why they call this show "the shocking social experiment. see why they call this show "the game of death." 8z8z8z8z8z8z8z 8z8z8z8z8z8z8z8z8z8z 8z8z8z8z8z8z8z8z8z8z8z8z8z8z8z8z ♪ the wrightnows
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your father is suffering. [ male announcer ] honey nut cheerios tastes great and can help lower cholesterol. bee happy. bee healthy. [ female announcer ] try new chocolate cheerios with a touch of delicious chocolate taste in every bite. thanks for your help. we turn now to a fake game show that plays on a shocking social experiment from nearly 50 years ago. at issue, just how far people will go to inflict punishment that they believe is real, even when they can hear what they think are screams of pain, as nick watt reports, human nature hasn't changed much. >> reporter: exactly like a cheesy game show. stern host, dramatic lighting and a glamorous assistant to strap one contestant into a chair.
when he get as question wrong, the crowd chants. punishment. and other contestants are told to edadminister a potentially lethal electric shock. 80% of the contestant boss what they're told. they deliver a charge that could kill. >> this experiment shows that in certain circumstance, it's going to make you something you don't want to do. >> reporter: now, the guy in the chair is actually an actor. so is the host. but the trigger happy contestants don't know that. and neither does the baying crowd. they think that pain is real. they go along with it. this revelation has shocked france. >> everybody says the same thing. everybody says, no, i would not do that. but we've done the stud dips and we know that the vast majority of people would. >> reporter: in the 1960s, an american psychologist, stanley
milgram, drechb by the events of the holocaust, to study the relationship between obedience and authority, conducted similar experiments. most people did what they were told, despite the screams of pain. to find out, we teamed up with dr. jerry berger. three years ago, dr. berger and chris cuomo did something similar on "primetime live." >> 150 volts. >> oh, that's all. get me out of here. i told you i had heart trouble. >> reporter: will troy listen as the learner begs him to stop, or will he follow -- >> the correct word was white horse. >> the next item is sad. >> reporter: he obeys the orders. why didn't you stop? >> the -- i saw him getting strapped in and they were just little, i mean, he could have just -- if he was in that much pain he could have tore himself
off. >> reporter: why are you putting it on him? >> i was just doing my job. >> reporter: both experiments, around 65% of people administered the potentially lethal shocks. so, how come 80% of contestants on "extreme zone" pulled the lever? >> what they've done in this french documentary is they added elements that make it even harder for people to refuse to go along. they had people sign a consent form saying they would do whatever they were told to do and they had an audience that was egging them on. >> reporter: remember, the audience is not in on the experiment. they really are encouraging 460-volt shocks. think about it. your plug at home is only 120 volts. >> it's not that people are sadistic or the people in the show were brutal people. when youook at the holocaust, you look at abu ghraib -- >> we don't feel like we were
doing things that we weren't supposed to, because we were told to do them. >> reporter: look at some of the horrible incidents in history. the tendency was to say, what was wrong with those people or there was something about those particular individuals, when it's not the individuals at all. it's the situation we put those individuals in that is more responsible than the kind of person they are. >> reporter: so, when we watch this game show, this social experiment, the really shocking part isn't that the contestants are prepared to kill. what's really shocking is that you or i would probably do it, too. i'm nick watt for "nightline" in london. >> a bizarre french television show with some very disturbing results. when we come back, well, first the cup cake was the in dessert. tonight, we lose the cup and see how the cake is standing on its pedestal all itself.
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with cynthia mcfadden. >> and now, dessert. what's not to like about cake? from frosting to filling, this dessert helps decorate some of our favorite occasions like weddings and birthdays, and these days, the master bakers are reaching new heights. cake, and for andrea canning, thank you. >> part sugar, part flour, all >> oh my god! >> reporter: the business of spawning reality shows with personalities. >> look, it's supposed to fit >> reporter: shows like "ace of and "the ultimate cakeoff" are drawing in millions of viewers. crocker -- >> that's a cookie, baby. sopranos."
>> itting a are valts me. >> reporter: you get little tips in here, don't you? >> we're italians. >> reporter: you're passion gnat about the cake. >> forget about it, you know? >> reporter: these confection their creations are everywhere. from the pages of celebrity magazines to the real housewives. cakes aren't just dessert anymore, they're a status symbol. why do you think people have so gotten into cakes? >> you know what it is? it's just that we can do these kind of cakes now. we can do cakes that don't look like cakes. when they see the cakes, it is a form of art and, up know, it's >> reporter: buddy has created >> i mean, look at this thing.
>> reporter: is it hard to keep >> i live for this this is like -- i need that challenge in my life. >> reporter: today, fans stand in line for up to two hours, with the cake boss. i guessed it. used to going through about a pint of icing through a cake. >> that's chocolate fudge. >> reporter: oh, my goodness. >> reporter: wow. not to mention three tons of sugar and thousands of eggs for and about 800 cakes that go out
cake blindfolded, i can ice -- >> reporter: can you do that? >> i can. >> reporter: something we just had to see. >> i'm going to let you make it unblindfolded and i guarantee i make it better than you. >> reporter: you're on. white. >> i'm supposed to do it and turn it? i'm so a natural at this. >> i have to say, i think you won this challenge. >> i think you did good. >> reporter: to get a crash created a "nightline" themed anchors, made out of chocolate who gave it the thumb's up. >> reporter: proving there's really no point in having your cake if you can't eat it, too. >> that is good. >> reporter: i'm andrea canning for "nightline" in new jersey. >> thanks, buddy. well the cake is gone, but i
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